EUR/USD fell on Monday as the market continues to concern itself with the European debt crisis. The Euro is fairly untouchable at the moment, even if it is sitting right on the 1.30 level, an obvious support area. The market could bounce from this level, but it should only provide the prudent trader with an opportunity to sell from higher levels at this point. The Dollar is simply too strong for the Euro currently. We are selling rallies, and would sell aggressively if the daily chart closes below the 1.29 level.

The EUR/USD started the week with choppy trading on reaction to the news from rating agencies and also pressured by the news of the death of North Korea’s leader Kim Jong-il that left the dollar stronger on haven demand. The euro remains weak in general with the start of a new week yet we can notice the quiet movement in the markets starting early ahead of the holidays. The pressure was seen from Fitch that downgraded the outlook for France to negative and also from Moody’s that cut Belgium’s credit rating yet the reaction was not very negative as the euro attempts to consolidate around $1.30. We still have investors waiting on the finance ministers’ decision that are following up on the EU summit and the pledge to give the IMF 200 billion euros. The news might continue to drag into the session on Tuesday if they give any comment to ease the jitters though in general we expect trading to remain choppy and mixed. Germany will release the Gfk Consumer Confidence Survey for January at 07:00 GMT which is expected to slow slightly to 5.5 from 5.6. Also at 07:00 GMT we have the Producer Price Index from Germany which is expected with 0.1% gain in November after 0.2% and on the year to ease to 5.2% after 5.3%. At 09:00 GMT we have the IFO survey for December were the Business Climate index is expected to fall to 106.0 from 106.6, the Current Assessment index to fall to 116.0 from 116.7 and the Expectations index to fall to 97.0 from 97.3. The United States will start the day at 13:30 GMT with the November housing starts which are expected with 0.3% rebound to 630 thousand from 628 thousand. Building permits are expected to drop 1.8% to 633 thousand from 653 thousand.

USD/JPY Technical Analysis for December 20, 2011

USD/JPY had a strong day on Monday as the Dollar is being bought up by traders in a bit to run to “safe havens”. The Dollar is without a doubt going to get a bid every time the markets get nervous, and the market being nervous seems to be more often than not. However, the 80 handle has been extremely resistive to even central bank interventions. The pair looks to be building upward pressure, and the triangle that is forming is indeed very bullish. If the triangle gets broken though, the long green candle from the last intervention should be paid attention to as it showed the Bank of Japan and its failure to break above the 80 mark that is so important from a long-term standpoint. The Japanese Yen is being worked against by its own central bank, and this shows just how attractive the Yen looks to the market as they simply cannot get the markets to move away from it. The economic situation in Japan is starting to weaken a bit, so this could in turn help, but the 80 mark that we mentioned above certainly is what needs to be overtaken to think that any rally can be sustained. Although the triangle looks strong, we prefer letting this pair rise to the 80 level, or at least as close as it can – and then selling aggressively. If we get stopped out, it is because the trend has changed, and we would be willing to take the opposite position as the daily close above 80 would be so massively bullish for this market. 2012 is coming fast, and the volume of trading will dry up the later we get into the week. Because of this, we could see a bit of a spike in this pair, but this should only serve as a chance to sell form higher levels as the longer-term trend continues.

The USD/JPY pair advanced with the beginning of the week, as the US dollar soared against other major currencies amid risk aversion that dominated the FX market after the reported death of North Korean leader Kim Jong-il that raised fears over the stability in the region and especially for Japan as it is the most exposed growth and security wise. Investors will be avoiding new positions the next two weeks as the year reached its end, where the current sentiment support the dollar as a safe haven currency amid the instability in the financial market. On the other hand, market awaits the last BOJ meeting in 2011 in which the bank could take further measures to increase liquidity and prevent the yen from increasing further. On Tuesday at 04:30 GMT, the Japanese economy will issue the All Industry Activity Index for October where it's expected at 1.1% compare to the previous drop of 0.9%. At 05:00 GMT, the Japanese Leading Index for October will be released, where the prior reading was 91.5, while the Coincident Index for October had a previous reading of 90.3. The U.S. economy will release the Housing Starts for November at 13:30 GMT, where it's expected to show a rise of 0.3% to 630 thousand compare to the prior drop of 0.3%. As for the U.S. Building Permits it's expected to drop 1.4% to 635 thousand from 653 thousand.

GBP/USD Technical Analysis for December 20, 2011

GBP/USD fell during the session on Monday as the markets went into the “risk off” trade. The Pound does enjoy support at the 1.55 level, and the bounce during the later hours of the session on Monday show this by forming a hammer for the daily candle. The UK is simply far too exposed to the European Union for us to feel comfortable owning it for any real length of time. The Dollar is strong around the markets, and as a result we aren’t very keen to sell it. This means that we will only sell this pair, but the fact that it is sitting on a massive support zone keeps us out of this pair currently. The support area starts at 1.55, and goes down to the 1.53 handle. The area being broken would have serious ramifications for the strength of this pair. The 1.53 level being closed below on the daily chart would be a breakdown of a massive head and shoulders pattern that measures down to the 1.41 level. The pair is going to face pressure going forward as the headlines out of Europe fail to relieve nerves for traders around the world. The UK banks unfortunately are going to be heavily exposed to the EU debt crisis, and the EU makes up over 30% of British exports. Both of these factors are going to weight on the strength of the UK economy, and by extension – the Pound itself. The pair has enjoyed a bounce over the last several months, but the downtrend does seem to be continuing. Because of this, we are selling only, and will certainly do so hand over fist if we do get below the 1.53 level. The Pound should continue to suffer at the hands of the buying of US Treasuries, which are presently enjoying some of the largest bid-to-cover ratios in history. The Pound, while still a viable currency overall, is going to play second fiddle to the Dollar for the foreseeable future as the world simply is far too risk-adverse at this point to buy.

On Monday, the pair showed a drop amid concerns in markets before the end of the year on expected relapse into recession to the U.K. economy and expected escalation in the euro area debt crisis.

Concerns aggravated after the death of North Korea's Kim Jong II triggered worries on possible disputes in this hot spot.

However, still the main focus in the market is on the latest developments from the euro area as many euro zone economies gird for bond selling this week.

Worries spread in markets after Fitch cut France's outlook put a number of countries includingSpainandItalyunder review for a possible downgrade.

On the other hand, ECB's Mario Draghi said to the Financial Times on Sunday the ECB can not overstep its mandate, lowering expectations the ECB will increase purchases of bonds.

This week, the main focus will be on GDP final reading from both economies, BoE minutes from theU.K.and housing data from theU.S.in addition to other important news.

Also, eyes will be on bond selling by large economies to test their ability to calm down markets.

On Tuesday, theU.K.will release Gfk consumer confidence survey for Dec. and nationwide consumer confidence for Nov. will be available at 00:01 where the former is predicted to linger at -31 while the later will steady at 36. At 11:00 GMT, U.K. CBI trends total orders for Dec. will be out, yet the news is not expected to have a significant impact on the pair's movements.

The main focus in theU.S.will be housing starts and building permits for Nov. due at 13:30 GMT which will provide evidence about the status of the housing market that triggered the 2008 crisis. Housing starts are expected to decrease to 630,000 from 628,000 in Oct., while building permits will probably show a fall to 633,000 from the prior 653,000.

The news from both economies is expected to affect the pair's movements yet any news from the euro area is likely to affect the pair also.

USD/CHF Technical Analysis for December 20, 2011

USD/CHF had a very quiet session on Monday as traders are starting to think of holidays, and not so much of economics. The pair continues to find support at the 0.93 level, and this is just below where the market sits presently. The 0.95 level will also be resistive, but only as a minor level in our opinion. The Swiss are working against their own currency, and the Dollar is the safest trade out there, so this should continue to put upward pressure on this pair over time. We are buying dips, but only with the knowledge of it being a slow grind higher, not a straight shot. We won’t sell – the SNB is working against that trade.

On Monday trading, the franc strengthened against the dollar to continue its advance for the third session after last week's SNB decision which involved the hold of interest rate at 0.00-0.25% range and keep of the franc's cap against the euro unchanged.

The Swiss National Bank (SNB) refused calls from exporters to raise the franc's cap or push interest rate to negative, giving some strength to it on expectations the bank will not intervene any soon as it will probably wait to see the latest developments in the euro zone.

However, the SNB still believes that "the franc is still high and should continue to weaken over time," leaving the door opened for further future interventions if needed, especially as the latest data from the Swiss economy referred to a slowdown in the growth pace.

Still, the main focus in the market is on the latest developments from the euro area as many euro zone economies gird for bond selling this week.

Concerns aggravated on Monday after Fitch cut France's outlook put a number of countries includingSpainandItalyunder review for a possible downgrade.

On the other hand, ECB's Mario Draghi said to the Financial Times on Sunday the ECB can not overstep its mandate, lowering expectations the ECB will increase purchases of bonds.

Also, the death of North Korea's Kim Jong II triggered worries on possible disputes in this hot spot.

On Tuesday, at 07:00 GMT, the Swiss economy will release its most important data for the week which is trade data for Nov. with exports and imports during the month. The trade surplus is predicted to narrow to 2.00 billion Swiss francs from the prior surplus of 2.15 billion francs.

The main focus in theU.S.will be housing starts and building permits for Nov. due at 13:30 GMT which will provide evidence about the status of the housing market that triggered the 2008 crisis. Housing starts are expected to decrease to 630,000 from 628,000 in Oct., while building permits will probably show a fall to 633,000 from the prior 653,000.

EUR/CHF Technical Analysis for December 20, 2011

EUR/CHF fell on Monday as traders continue to run from the Euro in general. The fact that the Swiss National Bank is working against the value of the Franc against the Euro and the pair still falls says plenty about the state of the Euro presently. The volumes are light, but the signal is there – you simply cannot buy this pair at the moment. However, the SNB is going to defend the 1.20 level, and the pair is difficult to trade for anything more than a scalp at this point. Presently, we see so much weakness that we are not willing to buy until we get closer to the SNB-imposed floor in this pair.

The EUR/CHF started the week with a clam move in a very tight range as the pair continues to lack momentum especially after the SNB defied called for another move to weaken the franc. The pair is trading within a very tight range with a slight bias favoring the franc still on unwinding of expectations for sudden SNB movement soon. The market was focused on Monday on the death of North Korean leader Kim Jong-il as haven demand in the Asian session was strong on the dollar and also affected the market on fear of worsening political status in the Korean Peninsula. We still expect tight ranged trading to dominate the coming two weeks with thinning trading volumes with the end of the year and on Tuesday any comments from the EU finance ministers after their conference call that was scheduled for Monday on discussing the pledged IMF aid will surely have some effect on the market. At 07:00 GMT, the Swiss economy will release its most important data for the week which is trade data for Nov. with exports and imports during the month. The trade surplus is predicted to narrow to 2.00 billion Swiss francs from the prior surplus of 2.15 billion francs. Germany will release the Gfk Consumer Confidence Survey for January at 07:00 GMT which is expected to slow slightly to 5.5 from 5.6. Also at 07:00 GMT we have the Producer Price Index from Germany which is expected with 0.1% gain in November after 0.2% and on the year to ease to 5.2% after 5.3%. At 09:00 GMT we have the IFO survey for December were the Business Climate index is expected to fall to 106.0 from 106.6, the Current Assessment index to fall to 116.0 from 116.7 and the Expectations index to fall to 97.0 from 97.3.

AUD/USD Technical Analysis for December 20, 2011

AUD/USD fell hard on Monday as the commodity trade was hit fairly hard. The “risk off” trade came back into vogue during the session, and the afternoon in the US saw an acceleration of this move. The Aussie will often suffer at the hands of a “risk off” trade, and as a result it was no real surprise we saw this pair fall. The breaking of the lows on Thursday signals a move down to the 0.97 level to fill the gap from a couple of weekends back, and we think this is what happens next. We are selling rallies, and a breakdown to fill the gap for a quick profitable short trade.

The AUD/USD pair retreated early Monday, as the US dollar gained momentum with the uncertainty regarding the global outlook, while demand dropped for the Aussie with the RBA's dovish stance. The current market sentiment pushed the higher-yielding currencies down, as risk aversion controlled the FX market and supported the US dollar especially after the announcement of the death of North Korea’s leader Kim Jon-il. The latest RBA decision to cut the interest rate to 4.25% reduced demand for the Australian dollar. While the RBA will release its Board meeting minutes for December, which will show officials' reasons behind cutting the interest rate. On Tuesday at 23:30 GMT (Monday), the Australian economy will issue the Conference Board Leading Index for October which had a previous reading of 0.1%. At 00:30 GMT, the Reserve Bank of Australia will release the Board's December meeting minutes, where the central bank will announce its reasons behind its last rate cut. The U.S. economy will release the Housing Starts for November at 13:30 GMT, where it's expected to show a rise of 0.3% to 630 thousand compare to the prior drop of 0.3%. As for the U.S. Building Permits it's expected to drop 1.4% to 635 thousand from 653 thousand.

USD/CAD Technical Analysis for December 20, 2011

USD/CAD had a volatile session on Monday as the market closed in an unchanged manner. The range was somewhat extended, but the more important fact is that the 1.03 level has continued to hold as support. The chart looks bullish, and the oil markets are looking weak. As oil wells off, the Canadian dollar does as well. The 1.05 level looks to be resistance in this pair, and the 1.07 level above it should be as well. The braking of the 1.05 leads to the 1.07, and the breaking of the 1.07 level leads to the 1.10 level. The pair looks ready to rally, but there is a lot of pressure to the downside in this pair, so it will be more of a grind than a run. We buy dips as long as we stay above 1.03 or so. We are not selling until we get below the 0.99 level in this pair.

The USD/CAD pair dropped but rebounded a little following Canada’s wholesale sales index for October, where wholesale sales jumped 0.9 percent from 0.3 percent that was upwardly revised to 0.5 percent for September and better than median estimates of 0.1 percent, however, the pair traded below the opening levels as the US dollar strengthened over the day amid speculation over economical instability in Asia following the death of North Korean leader Kim Jong-il. As the year nears to end, lights are about to fade around the financial markets, where will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but will be mostly concerned about the latest development from the 17-bloc euro area. Still, The USD/CAD pair could pick up if pessimism continues to dominate markets, but we still expect volatility to hold the steer for now, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair. Tuesday December 20: Canada will be joining the session data on Tuesday, where we expect that Canada’s consumer price index for November, where Canada CPI is expected to ease at 0.1 percent in November from 0.2 percent, while the core CPI is expected to rest at 0.1 percent from 0.3 percent registered in October.

NZD/USD Technical Analysis for December 20, 2011

NZD/USD fell on Monday as the commodity trade got hit. The markets sold all risk assets, and the Kiwi is always going to lose in that situation. The NZD/USD is very sensitive to this trade as the Dollar is the ultimate “safe haven” for currency traders. The 0.75 level below could provide some support, but the gap from a couple of weekends ago still hasn’t been filled. The markets are very headline sensitive as the EU situation suggests that the bad news hasn’t ended. The breakdown of all risk assets should continue, and the low volume that we see in the markets could provide fireworks in the near future as this pair is already less liquid than most of the majors. The pair has us selling rallies, and not buying at all as the headline risks are too great. We like selling also if the gap gets broken below as well, as it would be a massively bearish signal.

The NZD/USD pair started the week with losses, where the Kiwi lost more ground against the US dollar, as concerns increased regarding the EU debt crisis and possibility of spreading to other countries. Expectations remain for a weaker New Zealand dollar since the RBNZ announced their decision to keep the interest rate steady at its lowest level of 2.50%, in addition to the comfortable tone regarding the current inflation pressure. The U.S. economy will release the Housing Starts for November at 13:30 GMT, where it's expected to show a rise of 0.3% to 630 thousand compare to the prior drop of 0.3%. As for the U.S. Building Permits it's expected to drop 1.4% to 635 thousand from 653 thousand.